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Stuck With No Refinance

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Posted On: 10/16/2013

Question:

I am one of many unfortunate borrowers who is underwater, but neither Fannie Mae nor Freddie Mac owns my mortgage. I do not have the cash needed to bring down my loan balance and refinance, so what are my options, short of losing the house? I know so many people in this situation. We are stuck and we are worker bees who do not have the time to unite and ask the government for help with this discriminatory situation.

Answer:

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The assistance provided to foreclosed borrowers is strangely selective. For instance, to qualify for refinancing assistance under HARP, your loan must be owned by Fannie Mae and Freddie Mac, and it must have been sold to one or the other before May 31, 2009.

I have no idea how such a deadline was set, but you can bet on two things: First, a lot of people do not qualify for assistance because of the artificial limit. Second, if the home across the street had a loan bought by Freddie Mac or Fannie Mae on June 1, 2009 and was later foreclosed, the value of your property will still go down.

We know that foreclosure activity has fallen dramatically with the passage of Wall Street reform, meaning that relatively few new foreclosures are entering the system.

What we are really dealing with, in large measure, is the mess created from the foreclosure meltdown that began in 2006 and 2007 – a mess that surely did not end in 2009.

See if you qualify for a HAMP loan modification rather than a HARP refinance. There is a January 1, 2009 HAMP requirement but no mention of Fannie Mae or Freddie Mac at MakingHomeAffordable.gov.

Speak with local community housing organizations and get their advice – as you point out, you are not the only local homeowner with such concerns.

Lastly, contact your state attorney general. They may have programs and settlement money that can help in your situation.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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